Chapter 2Past Is Prologue, but Today Is What Matters

The United States is one of the richest countries in the world, with a GDP significantly higher than that of Europe, Japan, or China, productivity continuing to rise, and the stock market at record levels. Profits for U.S. companies between 2010 and 2014 have grown exponentially, and after-tax profits of U.S. firms as a share of national income exceeded 10.1 percent in 2016, a level last reached right before the Great Depression began in 1929.

Even so, America today, even with the benefits accorded the private sector via the tax system, is still faced with significant economic challenges. While wealth has increased, wages have not. The share of national income paid to U.S. workers has fallen by nearly 8 percent since 1970. And while wages have declined, the decline is far from equal. Higher-income workers receive a growing share of total wages, as the shares of the low- and middle-income segments of the workforce has either been stagnant or has fallen. From 2005 through 2014, income from wages and capital for eight out of ten U.S. households was either stagnant or declined. With no resolution in sight, it appears that income inequality will continue to increase.

And technological changes, if managed properly, can lead to economic growth and expansion of wages, yet they also run the risk that they will not benefit all Americans or all segments of the economy. This has led to political challenges across the United States, ...

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